Stuck at the Gate

Boeing Co., the world’s second- largest commercial airplane maker, today may announce a delay in its 787 Dreamliner program that could jeopardize the company’s plans to deliver the first jetliner by the end of the year, according to people familiar with the program.

The 787’s maiden flight, already moved to the end of March from last August, may now be pushed back to June, said the people, who didn’t want to be identified because they aren’t authorized to disclose the information. Boeing will announce a revised Dreamliner delivery schedule before U.S. stock markets open, the people said.

Already six months behind schedule, Dreamliner production has been hurt by parts shortages and assembly delays. Boeing has racked up 817 orders valued at more than $120 billion, making the Dreamliner its most successful new aircraft in sales. Boeing last month reiterated its goal for first delivery to All Nippon Airways Co. before the end of 2008.

“Compressing the test program to six months for a December delivery is dangerous,” said Michel Merluzeau, an aviation consultant at G2 solutions in Kirkland, Washington. “Boeing needs to do a very necessary mea culpa and delivery to All Nippon has got to be reset to spring 2009.”

Back in the late 90s, when I worked for Boeing (my first job after college), I saw some discontent within the engineering team I worked in. There was a lot of anxiousness over how the company was spreading out so much of its engineering work to places all around the globe. I worked with some hard-headed older guys who’d been working in the same place for a while and weren’t really known for their ability to change, and some of them had been down to the newly acquired McDonnell Douglas facilities in California and saw a preview of how this kind of outsourcing approach affects a flight control group.

I left the company during the engineering strike in 2000 and never really looked back. I can only wonder if some of the concerns my ex-co-workers had about the new direction of the company have been realized and are what’s causing the parts shortages and assembly delays today. Whatever is really causing the problems, it does concern me that they might rush their deliveries. This is ultimately why I find myself at odds with the popular libertarian notion that government regulation only results in a negative outcome. There are just times when companies have significant financial incentives to cut corners on safety. As much as I was impressed by how strongly Boeing did care about safety, it was impossible to ignore the fact that the work of the FAA was part of that equation. My experience there definitely moved me away from more extreme notions of having government “leave us alone.”

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Boeing 787 Dreamliner has long been anticipated by many constituents. And yet, here is probable news coming to tell us that it’s likely to be postponed again till June this year. While we cannot completely say the delay is caused by outsourcing, it is almost true that this situation is going to dent Boeing Co.’s reputation as the world’s second largest commercial airplane maker. The airplane maker certainly knows its strategic plans, and cannot compromise the quality of their product. It cannot simply run after deadlines and deliver said product without thorough tests. Otherwise, it will be held liable to future problems that may arise.

Lee, great post…that is why the utopist rhetoric of all flavors (libertarian, socialist, relgious/ideological), although mostly from the right these days, needs to stop.

We all live in the real world and need realistic solutions. Government does good things. It’s not perfect, always need tweaking/changing, but it plays a vital role. To scoff at it and want to ‘drown it in the bathtub’, is childish.

@4 Neither Airbus nor Boeing would exist if it weren’t for government assistance. We would not be able to fly around the world to the extent we can today if it weren’t for people using government in various ways.

@6 Steve, I actually think that it’s still the right move for Boeing in the long run, but I don’t think anyone really comprehended how difficult it would be to transition into that kind of a production scheme. There was a lot of optimism and a willingness to ignore potential risks.

The 787 program is suffering from a lot of problems, mostly because they were trying to do too many “new” things at once. (All these points have been reported in news or trade industry articles sometime within the past two years):

(a) Mostly carbon-composite material construction. A Boeing engineer told me that they “had gotten real good at bending sheets of aluminum”, but carbon composites were relatively new to Boeing. But it has been used for the past couple of decades on military aircraft, so there is some history. This part of the design challenge Boeing has been able to meet, so far (subject to airframe testing which has not yet occured).

(b) Outsourcing. Since Boeing didn’t have the experience or facilities (autoclaves, etc.) large enough to manufacture carbon-composite aircraft on this scale, it was forced to outsource, or settle for very long delays while the facilities were built. Also, it didn’t want to “bet the company” on the new aircraft to the same extent it had previously. In addition, countries with national flag carriers continued to push for a larger piece of the pie, in exchange for orders. So outsourcing of the manufacture of major componants was inevitable, to some extent. But as the recently transferred manager of the 787 program admitted, all vendors are not alike, and Boeing has had a challenge in managing them. Also, Boeing risks being left behind, as the vendors are the ones gaining the facilities, expertise, and profits, and they can decide to offer those assets to Airbus also, or for their own projects.

(c) New Skill Sets: Although working with carbon fiber is not completely unknown, for the guys on the factory floor it is an entirely new skill-set. Carbon fiber just doesn’t drill, bend, or attach together in the same way as aluminum, steel, and titanium. There is a learning curve there. A drilling mistake in carbon-fiber takes more time to fix than one in aluminum.

(d) Since everything else was being re-designed from scratch, Boeing decided to makeover the entire manufacturing process. They tried to convert to a “paperless” system on the factory floor to assign job tasks, show plans, exercise quality control, etc. They also tried to build a moving assembly line, but it’s obviously not in operation yet, as such.

(e) New factory team. Previous Boeing layoffs had left them with mostly “gray hairs” on the factory floor, workers who would be retiring within the next decade or so, taking their experience with them. Boeing needed an influx of younger workers. Since everything about this project was different from the old way, and since new skill sets were required, it made sense to put all the new workers through a special training program and then put them on the 787 program. This also took advantage of a “tiered” job classification system which Boeing won in the last Union contract – a 787 worker has a slightly different title (“manufacturing technition” instead of “machinist”), and earns a bit less, than a 777 worker. But these new workers have a lot to learn.

(f) Marketing – Somebody in marketing decided that the first airplane should roll out on July 7, 2007 (7-8-7 get it?). Everything worked stubbornly for that deadline. One way or another, that airplane was going to be available for pictures for the media by that date. But apparantly nobody in management had the guts to put their foot down, and say “no”. The push for the “can-do” attitude ended up with vendors shipping major fuselage sections with large portions of the work undone, which was complicated by Boeing throwing the pieces together in time to paint the whole thing and make it available for the “media day” deadline. Since then, the plane has had to be largly taken apart again, and workers are constantly finding that they can’t install newly arrived parts without taking apart the work they did the day or week before. Although subsequent planes are arriving from the vendors in better shape, plane # 1 continues to be stuck in manufacturing hell.

(g) Blame-Game. Now that the 787 program manager has been transferred into pergatory, everyone else is trying to pass the blame. The guys on the floor are blaming the vendors, management, and engineering, or even the previous or following shift. The management team is blaming the vendors and the union. The vendors are blaming the guys on the factory floor, saying they are causing more problems than they are correcting. Expect a lot more of this over the next few months – people’s jobs are on the line.

About making money on commercial aircraft programs: Boeing does make money on the commercial aircraft programs. If they didn’t, they wouldn’t be in the business.

But it is sometimes hard to unravel the extent to which Boeing benefits from the government. It isn’t a direct subsidy to the commercial aircraft division, which would certainly be a fair trade violation.

The substance of the complaints made by Airbus are that the U.S. subsidizes Boeing through its military contracts, which give Boeing profit, facilities, and expertise which it then uses in its commercial business. It is also arguing that by giving tax breaks and financing special worker training programs, the State of Washington is subsidizing Boeing.

Of course, Airbus also receives such indirect subsidies, the least of which is a guarantee that if Airbus loses money on any of its programs, the French and German governments will cover the losses – a guarantee which makes financing much cheaper for Airbus to obtain, and allows Airbus to take risks which Boeing can’t afford.

But the biggest subsidy of all is the government regulation of the civil aircraft industry, which benefits all of the aircraft manufacturers, airlines, customers, etc. It has provided the infrastructure of safe travel which makes everything else possible.

Off topic here (sorry to bust in on the local Boeing incompetence story):

The Bush adminstration has reached new lows: Obstruction of justice, ignoring court orders and laws. They have destroyed or lost millions of E-mails while under a court order and laws to preserve WH communications. this is deliberate and wholescale illegal activity. If clinton had done anything like this….and Nixon was set to be impeached for much less when he resigned.

I have been against impeachment because it was a distraction – and eventually the evidence for illegal activities, torture, undermining the constitution would come out. But now it is clear that these criminals (Bush/Cheney) will stoop to any levels to destroy evidence and obstruct justice.

Oh, I forgot to mention. It takes quite a few years for Boeing to make a profit on a specific aircraft model (i.e., recover engineering and development costs). That’s why they try to extend the life of the model as long as possible. This puts Boeing in quite a quandry with respect to the 777 – its just now beginning to make the lion’s share of the profit off that plane. That is also why Boeing is reluctant to replace it just yet with a carbon-fiber alternative. Airbus will try to force the issue by making their A350EX a bit larger, in order to compete at the smaller passenger-count side of the 777 sales. Boeing will probably convert the 737 next, since Boeing is already having a harder time competing in that market.

I forgot to mention something that even the Boeing marketing, engineering, and mangement people keep forgetting – the sale of spare parts. Lots of airplane parts can’t be purchased anywhere else, except from the manufacturer. Even if Boeing were to sell each plane at a loss, it would eventually make up for it in spare parts sales. That’s when I was convinced that Stonecipher was an idiot, when he first floated the idea of selling off the parts business. Talk about killing the goose that lays the golden egg!!!

14. Yep. Clinton should have just refused to take the deposition. That’s what Bush does, when he refuses to allow his administration officials to tesify under oath before Congress. Of course, Clinton didn’t have the Patriot Act and 9/11 to hide behind.

MTRK at 16 said:“rhp – Letting Boeing keep more of THEIR FUCKING MONEY is not “giving them a break”.

Think of it this way… I just decided not to rob you at gunpoint. Have I done you a favor?”

Bad analogy. A more accurate one would be as follows:

I’ll ask the state legislature to give me a 50% reduction on all state and local taxes paid by anyone who both (a) lives at my street address, and (b) works for my employer. I’ll also ask them to build special facilities at the U.W. and allow my kids to attend tuition-free, in order to be better prepared for the workplace.

It is not a direct benefit to one person or family, since it applies equally to anyone who meets the definition set forth in (a) and (b), above – I can’t help it if nobody else meets that definition.

Oh, and everybody else stays the same – well, actually, they will have to pay a bit more, or settle for a reduction in services, to make up for the loss of revenue to the state and locality due to the reduction in taxes and increase in special benefits which somehow benefit only my family. Don’t you remember economics 101 – “There is no such thing as a free lunch” (or did you skip that class, or the entire course)?

If you cut my taxes but not others, then only I benefit, and others have to shoulder an increased burden. That is pretty much the definition of a “tax break”.

Oh, and don’t forget that Boeing takes advantage of lots of infrastructure provided by the government here. Paine Field, Boeing Field, and Renton Field are just three examples. Boeing uses the road system to move its parts back and forth throughout the region, etc. Boeing just complained that it thought it wasn’t getting enough bang for its buck, when it came to taxes paid vs benefits recieved. There are certainly two sides to that argument, with valid points which can be made by each side.

But even though it is a “tax break”, and even though I resent having to go through this threat to “take my airplanes and leave” every few years or so, I happen to believe that the 787 aerospace manufacturer’s tax and investment/training package was in the best interests of the people of the State of Washington.

@2 Government is no more OR LESS perfect than other human organizations, and it’s time the ideologues owned up to this fact. Demanding perfection in government as an excuse for opposing any and all government is a scam.

Imagine what would be happening if Dino Rossi had won. Unbridled development and resource exploitation of the sort that washed away hillsides and inundated new car lots in Chehalis. Nothing — absolutely nothing — being done about crumbling bridges, crowded roads, or corroding ferries. Schools at a standstill. And an ever-more-regressive tax system as programs were slashed and tax cuts were directed toward those who least need and deserve them.

@4 In which case, anyone who needed a commercial jet would have to buy it from a monopoly that could charge whatever it wanted and turn out any old quality on whatever schedule suited it … borrowing the old AT & T motto, “We don’t care. We don’t have to.”

@10 You asked him a question, and he answered your question. Will a quickie internet search that turns up some $50,000 toilets sold to the Air Force answer your question? Does the phrase “cost plus” mean anything to you?

!2(a) Wasn’t so long ago that Boeing’s experiments with carbon composites were making hundreds of workers sick — and Boeing was denying there was anything wrong with their manufacturing process, in effect accusing their workers of malingering or faking medical claims.

Well, you were wrong, and I’m glad to see you finally coming around. They should be impeached even if removal has no chance in the Senate (because too many GOP senators put party loyalty ahead of country and preserving the Constitution) simply on principle. It would be obscene to allow this administration to squat in future history books with no impeachment on this record. Passing articles of impeachment also is necessary to deter future administrations (of any party) from thinking they, too, can do whatever they want no matter what the Constitution or laws say.

Failing to impeach Bush and Cheney is analogous to a municipality issuing a proclamation that its streets won’t be patrolled and no traffic tickets will be issued ever again. The result is the same.

Roger Rabbit Commentary: It’s what I’ve been saying all along — Bush’s fake economy is producing rampant inflation … and, on top of that, job losses. In other words, we’re in a Nixon-Ford stagflation mode. And it will be up to another Democratic president to bail us out, as Jimmy Carter did in the ’70s. But not before the country goes through a wrenching recession to wring all the Republican excesses and profligacies out of the economy. The next two or three years are going to be rough for everyone.

Jimmy Carter didn’t end infaltion. If he had, he would have been re-elected in 1980.

It was the Federal Reserve, through monetary policy, that ended inflation. Fiscal policy (controlled by our elected officials) is ineffective in controlling inflation because no politician is willing to sacrifice his/her elected position to enact the correct drastic spending cuts to end inflation. It took the Federal Reserve, under Mr. Volker and Mr. Greenspan, to use the heavy-handed monetary instruments to tame inflation by 1983. Why do you think the stock market took off in August of 1982 and hasn’t looked back? The actions of the Federal Reserve made investing more attractive than immediate spending by getting a handle on inflation.

Don’t count on the government and fiscal policy to do anything positive in the battle against inflation. Government’s most important priority is getting elected and staying in office as long as possible.

Somehow the editorial mavens at the fishwrapper managed to actually be funny:

“Pay up; no free spying

“America’s telecommunications giants might cower before the Bush administration when it comes to respecting their customers’ constitutional rights, but there are no pushovers in their collections departments.

“The polite phrase is ‘untimely payment,’ and the FBI was so, um, untimely in paying its bills, the telecoms pulled the plugs on the federal deadbeats. …

“Given the size of the federal budget deficit, the companies might want to wait until the checks clear before they obey future wiretap requests.”

@2 Government is no more OR LESS perfect than other human organizations, and it’s time the ideologues owned up to this fact. Demanding perfection in government as an excuse for opposing any and all government is a scam.

Roger Rabbit says:

@4 In which case, anyone who needed a commercial jet would have to buy it from a monopoly that could charge whatever it wanted and turn out any old quality on whatever schedule suited it … borrowing the old AT & T motto, “We don’t care. We don’t have to.”

First, Humans are imperfect therefore what we do is imperfect. So? What does that have to do with government vs private organizations? Private orgs/companies don’t have taxing authority over us. Holding government to a higher standard should be the norm as they operate for our best interests using OUR money. When a government wastes it hurts everyone. When a company wastes, they do so at their own peril. They lose investors, customers, maybe their business if they waste.

Now what happens when you put government in charge of industries? Say Healthcare? You said it yourself. Monopoly….”we don’t care becuase we don’t have too…” Thank you for pointing out exactly why government should not own industries.

@44 If by that you mean avoiding inflation is a zero priority of the Busheviks, you’re absolutely right. Jobs are another of their zero priorities. They simply don’t care about ordinary citizens. They’re too busy collecting their “due.”*

There is an interplay between government and business that, if either side gets too powerful, leads to tyranny.

You are too thick-witted to understand that.

As the oak tree stands before the typhoon wind and snaps, so are you and your ideology, whereas the Progressive Democrat sways with the wind and lives to fight another day.

A man like yourself, who makes decisions based solely on his ‘principles’ does not blind the wise Progressive Democrat that the block-headed conservative is merely too stupid to consider the facts in his deliberations.

“re 44: The Supreme Court had a lot to do with inflation in the 70’s. I’ll let you snicker over that for a while and then hit you with the facts.”

I’ll definitely look forward to your report on how the Supreme Court helped tame inflation in the 70s.

When it comes to managing the economy, the Fed does a much better job than elected officials. All politicans can do is get spending allocated to their district and states: “Spending in my district/state – good; spending in your district/state – bad!

I didn’t say the supreme Court tamed inflation. I said, at the behest of the credit card industry, it CAUSED INFLATION. In case your memory is unclear on the subject, infltion grew under Reagan for quite a time.

Politicians can’t do anything to stop inflation because they can’t control themselves when it comes to spending. That’s why fiscal policy is a poor weapon in fighting inflation. Monetary policy is the effective weapon for inflation fighting, and it’s a very, very painful tool to use. The reason monetary policy is effective is that it is a weapon controlled and administered by the Federal Reserve, not politicans like Carter or Regan. Carter had nothing to do with inflation-fighting in the 70s, and Regan had nothing to do with inflation-fighting in the 80s. It’s not a Democrat or Republican issue: it’s the failure of the Fed to make the hard choices that hurt ordinary people when fighting inflation. Monetary policy is supreme; fiscal policy is a side show.

What, you don’t like real history lessons? Or as I suspect, the truth is painful? You never knew the tie-in between the Fabians and the Eugenic Progressives? Never knew about Justice Holmes and his three generations of idiots are enough comment? (paraphrased) http://www.eugenicsarchive.org.....detailed=1

This is the NEW Progressive Democratic Party you hold so dear to your heart. These are it’s roots Heilery wants you to return to…

Didn’t you write yesterday you didn’t like Heilery? Go back and watch her July 2007 YouTube capture and check out her “back to the future” facts yourself.

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